Deere & Company
The world's biggest maker of tractors and combines, which also builds construction machines and lends farmers and builders the money to buy them.
The scores
Growth2/4 ↑
Revenue fell two years running and this year's guide is flat to down; construction and small ag growth offsets a still-shrinking large-ag business.
Business quality4/4 →
Protected: the dealer network held large-ag margins in double digits at the bottom, far higher than CNH's, though the repair settlement opens one lock.
Financial position3/4 →
Equipment operations carry modest net debt against $5B or more of yearly cash flow; the finance arm's $54.8B of debt funds its farm loans.
Execution record3/4 →
Kept margins in double digits through the slump and raised this year's guide, but tariffs and a falling large-ag line cut segment margins sharply.
Per share capture4/4 →
Diluted shares fell from 316.6M to 270.7M in four years on cash buybacks, and share pay is about 0.3% of revenue.
Potential2/4 →
The upside is a cyclical recovery of today's business; See & Spray is real but its whole US prize is about 2% of revenue.
Risk profile3/4 →
Tariffs, a 2027 union contract the workers already rejected an extension of, and a federal inquiry are real but survivable; no single binary event.
Valuation2/4 ↓
Full: buyers pay about $34.5 for each dollar of this year's guided profit; Deere's usual level needs earnings near the 2023 record.
Evidence quality3/4 →
Results and guidance are filed, but technology revenue is not reported and See & Spray's savings are the company's own figures.
If it works 0.8× · if it fails you keep about 76%.
The Verdict
We rate Deere Neutral. The business is strong: its dealers kept its big-farm-machine profits far higher than its nearest rival's through the worst farm slump in years. The price is full: at about 34.5 times this year's guided earnings, buyers expect profit near the 2023 record; any delay would hurt. The view hinges on how fast that recovery comes, and next year's outlook in late November is the first real answer. As a bet on its weed-spotting sprayers it is safe but has little upside: even if their acres doubled every season, the fees would barely move the company's value, while the machines and financing keep most of today's price.
The long caseIf farmers keep paying to spray only the weeds, every acre a camera sprayer covers becomes a fee Deere earns again each season.
The evidence under this - 8 claims
CNH's figure is adjusted EBIT including its own Raven impairment in R&D; Deere's segment profit is before corporate costs, so the gap is not exact.
A trough multiple is always high on a cyclical; the median includes peak years when the multiple was low.
- Investors may pay above the median on mid-cycle earnings if technology lifts Deere's peak margins.
- Buybacks raise earnings per share without higher profit.
The raise rests partly on $382M of tariff refunds the company says will not recur.
- A field can take more than one pass a season, and the unlimited licence offered for 2026 changes the price per acre.
- Deere also sells the sprayers and cameras, so the fee is not the whole revenue the product brings.
The acres are the company's own count, not audited, and include fallow ground charged at $1.
The 10-K says customers have adopted some precision technology and subscriptions more slowly than Deere expected (C13).
The company
Deere makes the machines a large farm runs on: big tractors, combines, planters and sprayers, now sold with satellite steering and cameras. See & Spray puts cameras along a sprayer's arms that spot each weed and spray only it, instead of soaking the whole field. Deere also sells smaller tractors and mowers, and excavators, loaders and road machines to builders.
Buyers would otherwise go to CNH's Case IH and New Holland, AGCO's Fendt and Massey Ferguson, CLAAS or Kubota, or keep running an older machine with a retrofit kit.
The evidence under this - 6 claims
The acres are the company's own count, not audited, and include fallow ground charged at $1.
How it makes money
Most of the money comes from selling machines to independent dealers, who sell them on to farmers and builders. Deere's own bank, John Deere Financial, then earns interest on the loans and leases that pay for many of them. Parts, service and technology fees add more, but Deere does not report its technology revenue separately.
The evidence under this - 4 claims
Where the money comes from, stream by stream
| Stream | Share of sales (fiscal 2025) | How it earns it |
|---|---|---|
| Production agriculture | 37% | Large tractors, combines, planters and sprayers sold to dealers and recognised on shipment. |
| Small agriculture and turf | 22% | Utility tractors, hay equipment, mowers and golf equipment through dealers and home-improvement retailers. |
| Construction, compact construction, roadbuilding and forestry | 24% | Earthmoving, Wirtgen road machines and forestry machines through dealers and company-owned outlets. |
| Financial products | 14% | Interest on retail and dealer loans, lease income and extended warranties, earned over time. |
| Other | 3% | Component sales to other makers, precision guidance and telematics subscriptions, dealer service and licensing. |
Who runs it
John May has been chief executive since 2019 and chairman since 2020; Joshua Jepsen has been finance chief since 2022. They led the record years and kept profits in double digits through the slump.
Insiders own under 1% of the shares. The bonus pays on returns on operating assets, sales and equity; half the long-term award rides on revenue growth and shareholder return against peers. Over the past year insiders sold shares 27 times, all under pre-set plans, and bought none.
The evidence under this - 3 claims
Why it wins, and who could beat it
Why customers come back
The edge is the dealer network: about 1,600 farm dealer locations in the US and Canada that repair, finance and resell Deere machines, so a farmer's nearest help is usually a Deere dealer.
It showed in the slump. In fiscal 2025 Deere's big-farm business still earned 15.4 cents of operating profit on each dollar of sales, while CNH's farm business earned about 6 cents on its own measure. One lock has opened: since July 2026 Deere must give independent repair shops the same tools its dealers have, for ten years.
The evidence under this - 5 claims
CNH's figure is adjusted EBIT including its own Raven impairment in R&D; Deere's segment profit is before corporate costs, so the gap is not exact.
Management says it already offered these tools and calls the settlement supportive of its parts business (S05).
The threat
CNH and AGCO both ship camera sprayers, and AGCO's PTx sells kits that add steering and targeted spraying to any brand of machine, so a farmer can upgrade instead of buying a new Deere. Independent repair shops can now take service work that used to go only to Deere dealers.
The evidence under this - 4 claims
Management says it already offered these tools and calls the settlement supportive of its parts business (S05).
The rivals: CNH, AGCO, TTC, CAT, TEX, and 2 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| CNH | CNH Industrial, through Case IH and New Holland machines with Raven targeted spraying and autonomyPriced against it: Yes | Production & Precision Ag | On sale | Yes |
| AGCO | AGCO's PTx, with Precision Planting and PTx Trimble retrofit kitsPriced against it: Yes | Production & Precision Ag | On sale | Yes |
| Private | Independent repair shops using the dealer-grade tools the FTC settlement opens to themPriced against it: Private | Production & Precision Ag | On sale | Private |
| TTC | Kubota and Toro utility tractors, mowers and turf equipmentPriced against it: One segment only | Small Ag & Turf | On sale | One segment only |
| Not listed | Banks and the Farm Credit System lending farmers and contractors the money for machinesPriced against it: Not listed | Financial Services | On sale | Not listed |
| CAT | Caterpillar, Komatsu and Doosan Bobcat construction machinesPriced against it: One segment only | Construction & Forestry | On sale | One segment only |
| CNH · AGCO | CNH's Raven targeted spraying and AGCO's PTx retrofit spraying kitsPriced against it: Yes | See & Spray | On sale | Yes |
| TEX | TerexPriced against it: One segment only | - | On sale | One segment only |
How big it could get
How big this could get
Count the acres: about 190.6 million US acres of corn, soybeans and cotton were planted in 2026. One See & Spray pass over every one at Deere's $5 fee would be about $0.95B a year. Deere's cameras covered 5 million acres in 2025, about 2.6% of that. New machines reach farms slowly while sales of big tractors and combines are still falling.
The evidence under this - 3 claims
The acres are the company's own count, not audited, and include fallow ground charged at $1.
The results
The numbers
Sales grew 8.0% over the twelve months to Aug 2026, faster than the −12% in the year to Nov 2025.
It keeps 10% of sales as profit, down from 17% in the year to Oct 2023.
Yearly sales growth has ranged from −16% to +24% over the last 5 years, with sales falling in 2 of them.
Shareholders' money earned 18% a year, down from 38% in the year to Oct 2021.
It turned 13% of sales into free cash, $6.02B over the last twelve months.
It owes $8.19B more than the cash it holds, about 1.1 years of the cash its operations bring in.
The share count fell 14% in 4.8 years, and pay in shares costs 0.3% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-10. Fiscal years end in November.
| Oct 2021 | Oct 2022 | Oct 2023 | Oct 2024 | Nov 2025 | 12 mo to Aug 2026 | |
|---|---|---|---|---|---|---|
| Size and growth | ||||||
| Sales | $44.0B | $52.6B | $61.3B | $51.7B | $45.7B | $48.0B |
| Sales growth | +24% | +19% | +16% | −16% | −12% | +8.0% |
| Profit | ||||||
| Operating margin | 18% | 18% | 21% | 17% | - | - |
| Net margin | 14% | 14% | 17% | 14% | 11% | 10% |
| What growth costs, per sales dollar | ||||||
| Research and development | 3.6% | 3.6% | 3.6% | 4.4% | 5.1% | 5.0% |
| Selling, general and admin | 7.7% | 7.3% | 7.5% | 9.4% | 10% | 9.7% |
| Pay in shares | 0.2% | 0.2% | 0.2% | 0.4% | 0.3% | 0.3% |
| Capital spending | 1.9% | 2.2% | 2.4% | 3.2% | 3.0% | 2.6% |
| Cash | ||||||
| Cash from operations | $7.73B | $4.70B | $8.59B | $9.23B | $7.46B | $7.25B |
| Free cash flow | $6.88B | $3.56B | $7.09B | $7.59B | $6.10B | $6.02B |
| Balance sheet | ||||||
| Cash and short-term investments | $8.02B | $4.77B | $7.46B | $7.32B | $8.28B | $8.93B |
| Debt | $43.8B | $12.6B | $17.9B | $13.5B | $13.8B | $17.1B |
| Net cash | −$35.8B | −$7.82B | −$10.5B | −$6.21B | −$5.52B | −$8.19B |
| Returns and shares | ||||||
| Return on capital | 11% | 16% | 28% | 18% | - | - |
| Shares (diluted) | 314M | 306M | 294M | 277M | 272M | 271M |
What growth costs
Deere holds its research and selling budgets steady in dollars through the cycle. When sales fall, as they did after 2023, those costs eat a bigger share of each dollar and margins shrink. When sales recover, the same budgets cover more sales, so growth widens the margin.
The evidence under this - 1 claim
The last report (20 Aug)
Quarter ended August 2026, filed figures.
In the quarter to 2 August 2026 sales rose 5% to $12.6B. The growth came from construction, up 18%, and small tractors and turf, up 12%. Big farm machines, the heart of the business, fell another 6%.
Management raised its fiscal 2026 profit guide to $4.75B to $5.00B, but $382M of tariff refunds over nine months helped, and those will not recur.
What it did to the thesisIt showed the bottom is near for the company as a whole, but not yet for big farm machines, the business the recovery depends on. It supported the quality of the franchise and left open how fast profit recovers, which the price already assumes.
The quarter in detail
Sales growth from the previous quarter, filed figures.
Earnings per share $5.10 against $4.69 expected; $5.10 as filed, with no adjustments.
The evidence under this - 4 claims
$382M of tariff refunds in the nine months, $110M in the quarter, flattered the margins and are not expected to recur.
The raise rests partly on $382M of tariff refunds the company says will not recur.
Tariff policy has changed several times in the year; the European rate fell from about 25% to 15% in June.
- US retail sales of large tractors and combines were still falling 10% to 27% in the seven months to July 2026 (C07).
- South American and European demand weakened during the year and the guide for both was cut.
What management did with the money
Deere has bought back shares for years: the diluted count fell from 316.6M in fiscal 2020 to 270.7M, and $7.9B of approval remains. In the slump it slowed buybacks to protect cash. Share-based pay is tiny, about 0.3% of sales. It bought Tenna, construction fleet software, for $439M.
Insiders in 2026Q3: 12 purchases and 34 sales, from their Form 4 filings.
The evidence under this - 3 claims
The price, and where we disagree
In short. Full. The price already pays for a recovery to near-record profit, so a slow or partial recovery would leave the shares looking expensive.
The shares rose 34.8% in a year, mostly because buyers paid more for each dollar of sales rather than because sales grew. They peaked on 23 September and have since fallen back.
The next real test is 25 November, when Deere gives its fiscal 2027 outlook. Analysts already expect earnings to rise about a quarter next year. A new federal inquiry into farm equipment makers, with comments due 7 December, is a second thing to watch.
The evidence under this - 5 claims
How we read the multiple
A buyer pays about 34.5 times the earnings management guides for this year. Earnings per share were $34.63 at the 2023 peak and are guided near $18 this year, so the price is betting on most of that gap closing.
- Deere's usual price over six years: about 17.8 times a year's earnings.
- At that price per dollar of earnings, today's share price needs about $34.90 of earnings a share.
- That is roughly the fiscal 2023 record of $34.63.
- Analysts expect $27.13 by fiscal 2028, still short of it.
Against its own history. Investors are paying far above Deere's own normal, which treats this year's low earnings as temporary and the full recovery as a given.
The evidence under this - 4 claims
A trough multiple is always high on a cyclical; the median includes peak years when the multiple was low.
- Investors may pay above the median on mid-cycle earnings if technology lifts Deere's peak margins.
- Buybacks raise earnings per share without higher profit.
Priced against its rivals
The competitors its own annual report names, each confirmed against the rival's filing. Measured on price for each $1 of yearly profit, cheapest first:
| Ticker | Company | price for each $1 of yearly profit |
|---|---|---|
| AGCO | AGCO | 14.3× |
| DE | Deere & Company | 34.4× |
| CNH | CNH Industrial | 45.8× |
The middle of the other 2 is 30.0. Deere & Company is 2nd cheapest of 3.
Rivals' figures come from a data provider, so read the spread of the group rather than any single pair.
Only two listed rivals truly compare, both in the same slump, so the gap says how much extra investors pay for Deere's quality, not where the group sits.
Private or foreign rivals that cannot be priced: CLAAS KGaA mbH, Kubota Corporation, Komatsu Ltd., Volvo Construction Equipment (Volvo Group AB) and SDLG, Hitachi Construction Machinery Co., Ltd., Doosan Bobcat Inc. and Doosan Infracore, SANY Group, XCMG, Liugong and LGMG, Fayat Group, GOMACO Corporation and Tigercat Industries, Ponsse Plc.
The bet: what it pays if it works
The bet is on See & Spray, camera sprayers that spray only the weeds and charge a fee for each acre where they save spray. The rest of Deere is valued at what buyers pay for each dollar of its profit in a normal year.
That rest does not cover today's price. Even if See & Spray acres doubled every season for three years, the fees would add only a sliver of value: an expensive bet. If it fails, shareholders keep the machines and financing, most of today's price.
| See & Spray revenue in two to three years | See & Spray acres needed | At the stated multiple |
|---|---|---|
| $100.00M | about 20.0M at 100% kept | 0.8× |
| $200.00M (the big win) | about 40.0M at 100% kept | 0.8× |
| $475.00M | about 95.0M at 100% kept | 0.8× |
To pay 2× (a Fair bet) it would need about $21.55B of See & Spray revenue (about 4.3B See & Spray acres); to pay 5× (a Cheap bet), about $73.48B of See & Spray revenue (about 14.7B See & Spray acres), at the same multiple.
Each row is See & Spray alone, plus the rest of the company (Deere's machines, parts and financing) counted at about $130.72B.
The steps it has to take
- Done See & Spray sold on a per-acre fee and used on more than five million acres in 2025
- In progress About a third of North American sprayers ordered for model year 2027 carry it from the factory due 2027-06-30
- Not started Deere reports 2026 season acres well above five million due 2026-12-31
- Not started Deere discloses See & Spray or precision technology revenue due 2027-12-31
The detail behind the label
The evidence under this - 5 claims
The acres are the company's own count, not audited, and include fallow ground charged at $1.
The 10-K says customers have adopted some precision technology and subscriptions more slowly than Deere expected (C13).
- Investors may pay above the median on mid-cycle earnings if technology lifts Deere's peak margins.
- Buybacks raise earnings per share without higher profit.
Where we disagree with the market
The farm cycle has bottomed, and Deere, the quality leader with a technology edge, is the way to own the recovery.
The franchise is the best in farm machinery, but the recovery looks measured and the price already pays for a full one.
Management itself expects a measured recovery, and US sales of the biggest four-wheel-drive tractors were still down 27% in the first seven months of 2026.
The evidence against us: early orders for planters and sprayers are up mid-single digits, and if fiscal 2027 guidance points to a fast rebound, today's price could prove fair.
What analysts say, and the evidence
The evidence under this - 5 claims
- US retail sales of large tractors and combines were still falling 10% to 27% in the seven months to July 2026 (C07).
- South American and European demand weakened during the year and the guide for both was cut.
A trough multiple is always high on a cyclical; the median includes peak years when the multiple was low.
What could go wrong, and how we would know
The risks
- A slower farm recovery. Big tractor and combine sales are still falling; if farm incomes stay low another year, the recovery the price assumes arrives late.
- Tariffs on its costs. Tariffs cost about $1.1B this year and management expects about $1B again next year, while this year's refunds will not repeat.
- A strike in 2027. Union workers rejected a contract extension in August 2026; the current contract ends in 2027, and a long strike would stop US factories.
- Regulators on the dealer model. The repair settlement opens service to rivals, and a new federal inquiry is looking at how farm equipment is made and sold.
- A bank inside the company. John Deere Financial carries about $54.8B of debt; a deep farm credit downturn would hit loan losses and funding costs.
The evidence under this - 6 claims
Tariff policy has changed several times in the year; the European rate fell from about 25% to 15% in June.
Deere says the union's counter-offer was about half a billion dollars above its own; a strike in 2021 lasted about five weeks.
Management says it already offered these tools and calls the settlement supportive of its parts business (S05).
What we still do not know
- How much Deere earns from its technology, which it does not report separately.
- Whether See & Spray's herbicide savings hold up when someone outside Deere measures them.
- Whether farmers adopt pay-per-acre and subscription technology faster than the slow uptake Deere's annual report warns about.
The evidence under this - 3 claims
The yield trials were commissioned by Deere; the saving is lower on fields with heavy weed pressure.
What would change our view
- Neutral→AttractiveA price that pays only for consensus
It needs:
- ○The shares fall to 20 times analysts' fiscal 2027 earnings, from about 27 today.about $453.23 today, 29% below the last close
- Neutral→AttractiveThe recovery arrives faster than priced
It needs all of:
- ○Deere guides fiscal 2027 net income at $6.5B or more at the midpoint.checked at the next results, due by 25 Nov
- ○US sales of four-wheel-drive tractors rise from a year earlier six months in a row.checked at the next results, due by 25 Nov
- Neutral→UnattractiveThe trough lasts longer
It needs any of:
- ○Deere guides fiscal 2027 net income below $4.75B at the midpoint.watched as it happens
- ○Deere expects US and Canadian big-farm-machine sales to fall again in fiscal 2027.watched as it happens
We would also be wrong if
- Big-farm operating margin falls below 10% in fiscal 2027.
- A union strike stops US factories for more than four weeks in 2027.
What is coming
- 25 November 2026 Q4 fiscal 2026 results and fiscal 2027 outlook: Next year's net income guide against the consensus, and the large-ag industry outlook.
Every dated event ahead
- 25 November 2026 Q4 fiscal 2026 results and fiscal 2027 outlook: Next year's net income guide against the consensus, and the large-ag industry outlook.
- 7 December 2026 FTC and USDA inquiry comment deadline: Whether regulators widen their look at farm equipment distribution beyond repair.
- 19 February 2027 Q1 fiscal 2027 results: Whether early orders turned into large-ag shipments and how tariff costs land.
- 31 October 2027 UAW contract expiry and bargaining: Labour cost for the next six years, and whether US factories strike as in 2021.
Since we wrote this
- 27 OctBet moveBet re-struck: Priced for success to Safe, little upsideRe-priced at the 26 October close.
- 26 OctBet moveBet re-struck: Safe, little upside to Priced for successRe-priced at the 23 October close.
- 19 OctBet moveBet re-struck: Priced for success to Safe, little upsideRe-priced at the 16 October close.
- 14 OctBet moveBet re-struck: Safe, little upside to Priced for successRe-priced at the 13 October close.
- 10 OctThesis writtenNeutral, medium convictionThe best farm machine maker at the bottom of its cycle, with real but small robot revenue, at a price that already pays for the recovery.
Sources 18
Sources - 18
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2025-12-18business, segments, competitors, dealers, revenue by product line, segment results, risk factors, legal proceedings, borrowings, buybacks and officersbacksC01C02C03C08C09C13C16C17C18C19C23C26C27C28C29C30C32
- S02primarycompany filing2025-11-26fiscal 2026 net income guidance as first issuedbacksC05
- S03primarycompany filing2026-08-20quarterly results by segment, tariff refunds, raised guidance and the industry outlookbacksC04C05C06C26C28C36
- S04primarycompany filing2026-08-27nine-month cash flow, buybacks, the Tenna acquisition and performance obligationsbacksC04C30C41
- S05primarytranscript2026-08-20early order programs, technology take rates, tariffs, construction demand and the repair settlement
current EOP trends suggest factory adoption of See & Spray will nearly double
backsC06C12C36C37C41 - S06primarycompany filing2026-01-14share ownership, large holders and the pay metricsbacksC32C33
- S07primarycompany release2025-11-04See & Spray acres, herbicide savings, trial yields and the per-acre fee
By aligning the technology cost ($1/fallow acre or $5/in-crop acre) with the benefit delivered by the technology (unsprayed acres)
backsC10C11C16 - S08primaryregulator2026-07-08FTC, States Secure Settlement with Deere & Company, Advancing Farmers' Right to Repair US Federal Trade Commissionthe terms and length of the repair settlement
to provide farmers and independent repair providers with the same equipment repair resources, including applicable software capabilities, that it currently provides to authorized Deere dealers.
backsC19 - S09primaryregulator2026-10-07FTC and USDA Seek Public Comment on Agricultural Equipment Manufacturing and Distribution Market Practices US Federal Trade Commission and US Department of Agriculturethe joint inquiry and its comment deadline
The Federal Trade Commission and the U.S. Department of Agriculture launched a joint public inquiry
backsC20 - S10primarygovernment data2023-04-03USDA Economic Research Service, Amber Waves: Most Row Crop Acreage Managed Using Auto-steer and Guidance Systems USDA Economic Research Serviceauto-steer and guidance adoption by crop and farm size
Adoption rates ranged from 54.5 percent of soybean acres in 2018 and 55.9 percent of winter wheat acres in 2017 to 58.4 percent of acres planted to corn in 2016
backsC14 - S11primarygovernment data2026-06-30USDA NASS Acreage report news release, June 30, 2026 USDA National Agricultural Statistics Service2026 planted acres of corn, soybeans and cotton
estimated 95.3 million acres of corn planted in the U.S. for 2026, down 3% from last year
backsC15C16 - S12primaryindustry data2026-08-11AEM United States Ag Tractor and Combine Report, July 2026 Association of Equipment ManufacturersUS retail unit sales of tractors and combines
4WD Farm Tractors 152 248 -38.7 1,043 1,428 -27.0 465 Total Farm Tractors 15,985 17,938 -10.9
backsC07 - S13primarycompany filing2026-02-26CNH Industrial N.V. Form 10-K for 2025 CNH Industrial N.V.CNH's agriculture margin and its targeted-spraying and autonomy productsbacksC18C21
- S14primarycompany filing2026-02-13AGCO Corporation Form 10-K for 2025 AGCO CorporationAGCO's PTx brand-agnostic precision retrofit businessbacksC22
- S15secondaryvendor data2026-10-10Research pack (frozen): FMP market data, estimates, rating history and price seriescontent/DE/research-pack.jsonprice, returns, the price move decomposition, consensus estimates, rating history, valuation history and the next earnings datebacksC24C25C26C27C38C39
- S16primaryother2026-08-23UAW: UAW Deere Members Reject Contract Extension Offer United Auto Workersthe rejected extension and the union's position
Members of the United Auto Workers at John Deere voted today to reject the company's proposal to extend the current collective bargaining agreement through 2029.
backsC35 - S17primarycompany filing2026-10-10open-market sales and the 10b5-1 plan flagbacksC34
- S18primarycompany filing2026-10-10five years of revenue, costs, cash flow and diluted sharesbacksC02C24C30C31C40